42% of e-marketers are leaving money on the table

If you’ve been here before you know how much I dislike lazy, uniformed e-marketers. Relax, this is not going to be another rant. I want to help you get better results, and maybe reduce the “junk” that fills my in-box every night.

Forrester Research reported that the average cost per order from an email marketing campaign was only $6.85. Compare that to $12.27 and $19.32 for affiliate and paid search campaigns and it’s a no-brainer as to why companies are ramping up their plans to do even more email marketing. Unfortunately, many companies are leaving money on the table. The same Forrester study showed that of the companies doing email marketing, only 58% segment their lists based on customers’ purchase history or preferences. This lack of segmentation not only costs them revenues, it is needlessly filling their customers’ mailboxes with unwanted mail.

If Customer’s don’t want it – It’s SPAM

One of the most difficult things for some e-marketers to understand is that just because someone opts in to their mailing list, that does not mean they want to see every offer under the sun. It does not take many off-target emails before the customers start to view messages as an intrusion – spam, and not as messages from a trusted merchant. It won’t be long after that when they start ignoring your messages, unsubscribe, or worse yet – click the “spam” button in their email software.

List segmentation is the solution to this problem. By categorizing your subscribers into many smaller, targeted lists you are able to send them messages that are more likely to be of interest to them, therefore improving your click and conversion rates.

We’ll examine several forms of segmentation and how they might benefit a fictional sporting goods retailer. The easiest methods are based on basic demographic data such as gender, age and geography. Every retailer should be collecting and using this data at a minimum. Loren McDonald, vice president of industry relations at e-mail services provider Silverpop Systems Inc. has been quoted as saying that with basic demographic segmentation, a retailer might increase open rates, click-throughs and conversions by 10% to 20%.

Gender Segmentation

As much of the country is well into the cool weather of autumn, our store wants to run a special on sweaters. They could broadcast a generic message to their entire list. Or, if their list contains some very basic demographic data (which it really should), they could spend a few extra minutes and craft two messages, each written to specifically target either men or women. Believe it or not, this simple step will increase the click and conversion rates.

Geographic Segmentation

The purchasing department managed to score a great deal on snow shoes. Naturally, our store wants to pass the savings on to its loyal customers (and make some bucks at the same time). How likely is it that someone in Arizona will be interested in a pair of snow shoes? I’ll say not very. The e-marketing team should pull out a map of the USA and draw a line dividing the north and south halves….you know, places that might or might not have snow. They should only send email to the people north of that line.

Customer Preference Segmentation

Our sporting goods store sells a wide variety of products, as such it could be difficult to get a fine-grained detail of specifically what each customer likes. However, it’s pretty simple to create several categories of goods and ask them to select which they are interested in when they subscribe. Maybe categories like; Outdoor, Summer sports, Winter Sports, Water Sports, Hiking, Biking, etc. Now you are able to target these people more accurately.

Click-through Segmentation

There are a couple ways to segment based on how your subscribers react to your messages. The first is one that usually causes the V-8 head slap when I tell people about it. You are already tracking when people click through, right? Are you tracking how often each individual person clicks though? Why not? Segment your lists by those that are frequent clickers, occasional clickers and almost never clickers. Target each of them with specific messaging. This is also a good method of performing housekeeping on your lists – if somebody NEVER clicks on your links, why continue to send them messages?

If your messages contain multiple offers, make sure you are tracking each one uniquely and also by who clicks on them. Over time you may notice a trend that some subscribers more frequently click to offers to certain products or manufactures than others. You can use that information to send people messages that specifically target that product or manufacturer. For example, our sporting goods store may see that some people click links to Nike shoes and others seem to prefer the Converse brand. We could use that information and increase our click through rates by targeting messages to people based on the brand preferences.

Customer Activity Segmentation

This method is both powerful and potentially complicated. Use your sales system to track what products subscribers view on your Web site and when they abandon a product in the shopping cart. There are a couple things you can do with this data. First, group the people that browsed your site by product or product type and send them specific messages enticing them to come back and purchase.

For the people that abandoned the shopping carts you’ll need to first do some analysis to determine why they did not complete the order. Was it because of price? Is the process too complicated? Is your shipping too costly? After you have figured that out you will know what actions to take. If price appears to be the problem, you can send out messages with enticing offers. It’s possible that the shopper just got distracted and forgot. If that looks like the case, send out messages to all of those people and remind them about the purchase they still have pending.

Date/Time Segmentation

Humans are creatures of habit. I read a report not too long ago (sorry, I couldn’t find a link) that showed people tend to do the same types of things online more or less on the same days of the week and times of the day. If you are able to group your subscribers by when they are active on your site, or when they subscribed to your mailings and send them mail on the same day of the week and time of the day, it is logical to assume that they would be online and be at their computer when your mail arrives. People are more likely to open a new message when it arrives than they are one mixed into a list of several in their in-box.

Blended Segmentation

The holy grail of email marketing. I think you’ll agree that each of the (fairly) simple methods I’ve discussed could have significant impact on your clicks and conversions. Now, imagine what could happen when you start to blend these methods. If you could send a message at 10 AM on Wednesday to men, over 40, who live in the south, prefer converse products and recently looked at running shoes on your Web site – wow! That could really be amazing.